Czech Post profits down 32%, but parcels offer potential

Czech Post saw its profits drop by 32% in the first half of the year, while revenues fell by just over 4% compared to the same period in 2011. The company said its profits for the first half of 2012 stood at CZK 460m ($22.8m USD), while revenues reached CZK 10.03bn ($497m USD).

Despite the impact from the continuing decline in mail volumes, the Post said its profitability demonstrated that its business could generate income, giving it some confidence ahead of the full opening of the Czech postal market to competition next year.

As it continued preparations for the 2013 market liberalisation, the company said its traditional postal services as well as newer electronic services both achieved positive contributions to its results.

But Czech Post’s new parcel portfolio as launched at the end of 2011 has been particularly successful, while new services supporting e-government have also been growing revenues.

The Post said one interesting trend is that while long-term interest in letters appears to be on the wane, registered mail services have remained a very stable part of the business mail revenue stream, the company said.

New print periodical distribution services that the Post began in the middle of last year have also been contributing to overall revenues, and is seeing growing interest.

On the cost side of the business, although it has been investing in new vehicles and infrastructure, Czech Post said it has managed to deliver savings from its equipment and service operations.

Commenting on the first half results, Petr Zatloukal, the Czech Post chief executive, said: “Strong earnings are good guarantees of completing preparations for full liberalisation, but the company needs funds for an intensive investment programme – whether it’s a complete reconstruction of the logistics network, fleet renewal, or investment in ICT and new technologies.”

Under European postal law, the Czech Republic is one of 11 remaining EU Member States still to fully liberalise their postal markets, but the countries are due to allow private sector companies to provide collection, sorting and delivery services for all mail from January.

E-commerce terminals

Czech Post, which employs around 34,000 people at 3,385 locations, has recently been working to build on growth in e-commerce shipping, and last week saw the launch of a new trial of self-service parcel terminals.

The new terminals – called balíkomaty – allow online shoppers to pick up parcels outside normal business hours, their packages delivered into secure lockers that they can access through a special PIN number texted or emailed to them when their parcel arrives.

The first balíkomaty machines began use at Prague’s main post office last week, but following the trial they look set for expansion across the country, with the possibility of access 24 hours a day.

Czech Post says it is in the process of evaluating bids for a framework tender to supply more parcel terminal machines, with a contract work around CZK 490m in value ($24.2m USD) set to be offered to one supplier this autumn.

The company believes the first 10 machines will then be installed for the beginning of 2013, in Prague and the southern Czech city of České Budĕjovice.

By the end of 2014, Czech Post is expecting to have a network of 150 parcel terminals across the country, mainly in regional and district towns with significant populations, with research suggesting ideal locations are shopping centres, post offices and stations.

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